Investor Update Winter 2018 - PVH Corp.
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Investor Update
Winter 2018
Investor Update Winter 2018
Safe Harbor
We (PVH Corp.) obtained the market and competitive position data used throughout this presentation from research, surveys or studies
conducted by third parties, information provided by customers and industry or general publications. Industry publications and surveys generally
state that they have obtained information from sources believed to be reliable but do not guarantee the accuracy and completeness of such
information. While we believe that each of these studies and publications and all other information are reliable, we have not independently
verified such data and we do not make any representation as to the accuracy of such information.
The information in our presentation contains certain forward-looking statements which reflect our view as of November 29, 2018 of future events
and financial performance. These forward-looking statements are subject to risks and uncertainties indicated from time to time in our SEC
filings, as more fully discussed in our safe harbor statements and risk factors found in our SEC filings. These risks include our right to change
strategies, objectives and intentions; our need to use significant cash flow to service our debt obligations; our vulnerability to weather, economic
conditions, fuel prices, fashion trends, loss of retail accounts, epidemics, war, terrorism, scarcity of raw materials, fluctuations in foreign
currency exchange rates and other factors; the impact of new and revised tax legislation and regulations, particularly the recently enacted U.S.
Tax Cuts and Jobs Act; our reliance on the sales of our business partners; and our exposure to the behavior of our associates, business
partners and licensors. As such, our future results could differ materially from previous results or our expectations as of November 29, 2018.
We do not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimate regarding
revenue or earnings, whether as a result of the receipt of new information, future events or otherwise.
This presentation includes non-GAAP financial measures, as defined under SEC rules. Reconciliations of these measures are included at the
end of this presentation. Our SEC filings are available on our website at PVH.com and the SEC’s website at sec.gov.
Investor Update Winter 2018
PVH By The Numbers
PVH PVH FOUNDATION
ESTABLISHED IN
36K+ (THE COMPANY’S PHILANTHROPIC DIVISION)
HAS BEEN IN EXISTENCE FOR
30+ YEARS
1881 GLOBAL ASSOCIATES
~1M GARMENT WORKERS IN
OUR SUPPLY CHAIN
~50% REVENUES GENERATED
OUTSIDE OF THE U.S.
$8.9B
2017 REPORTED REVENUES
WE OPERATE IN OVER
40 COUNTRIES ~$20B
2017 GLOBAL RETAIL SALES
Investor Update Winter 2018
1 Individuality
Be You.
Our 2 Partnership
Work Together.
Core 3 Passion
Inspire Others.
Values 4 Integrity
Do the Right Thing.
Investor Update Winter 2018 5 Accountability
Take Ownership.
CR
Make Positive Impacts
Corporate Responsibility (“CR”) is People
central to how we conduct business, Develop & Empower
as we recognize both the opportunity Our people are our most valuable asset. We aim to
protect the human rights of every worker.
and the responsibility for business to
take a lead role in addressing
pressing global issues.
Environment
Nurture & Preserve
We believe CR helps strengthen our We are committed to reducing our impact on the
organization by managing risk, environment & sustainably managing resources.
maximizing efficiencies and driving
value in a rapidly changing world.
Through our collective efforts, we Communities
seek to create value for both society Invest & Engage
We are engaged in the communities where we work
and our business. & live with a focus on women & children.
Investor Update Winter 2018
Three Distinct Businesses
All positioned for global growth
PVH CORP. 2017 CALVIN KLEIN 2017 TOMMY HILFIGER 2017 HERITAGE BRANDS 2017
Global Retail Sales: ~$20 BN Global Retail Sales: $9.1 BN Global Retail Sales: $7.4 BN Global Retail Sales: $3.4 BN
Revenues: $8.9 BN Revenues: $3.5 BN Revenues: $3.9 BN Revenues: $1.6 BN
EBIT Margin*: 9.7% EBIT Margin: 11.9% EBIT Margin*: 12.9% EBIT Margin: 6.7%
* Figures exclude certain amounts that were deemed non-recurring or non-operational. Refer to Appendix for GAAP reconciliations.
Investor Update Winter 2018
PVH is a Global Leader in the Apparel Industry
PVH is one of the largest global apparel companies with nearly $9 billion in revenues
2017 Revenue
($ in Billions)
$11.8
$8.9
$6.5 $6.2
$4.9 $4.7 $4.5
$3.7
$3.2
$2.8 $2.5 $2.4
Source: Factset.
Investor Update Winter 2018
Calvin Klein And Tommy Hilfiger Are Key Drivers Of Our Business
(1)
Calvin Klein and Tommy Hilfiger currently account for over 80% of PVH’s revenues and ~90% of PVH’s EBIT
Revenue by Business (2017) EBIT(1) by Business (2017)
10%
17%
44%
49%
41%
39%
Tommy Hilfiger Calvin Klein Heritage Brands
(1) Figures exclude certain amounts that were deemed non-recurring or non-operational, as well as corporate expenses. Refer to Appendix for GAAP reconciliations.
Investor Update Winter 2018
PVH Has A Significant Global Presence
Just over 50% of PVH’s revenues and approximately 65% of PVH’s EBIT(1) are generated outside the U.S.
Revenue by Region (2017) EBIT(1) by Region (2017)
7% 10%
12%
17% 35%
48%
33%
38%
U.S. Europe Asia Pacific Americas (Excluding U.S.)
Note: Americas (excluding U.S.) includes Canada, Mexico, South America, Central America and the Caribbean; Europe includes the Middle East and Africa; Asia Pacific includes Australia and New Zealand.
(1) Figures exclude certain amounts that were deemed non-recurring or non-operational, as well as corporate expenses.
Investor Update Winter 2018
PVH Global Store Counts By Region
(As of November 4, 2018)
NORTH AMERICA(1) EUROPE(2)
TOTAL STORES: ~595 TOTAL STORES: ~2,065
Tommy Hilfiger: ~245 Tommy Hilfiger: ~930
Calvin Klein: ~190 Calvin Klein: ~1,135
Heritage: ~160 2. Includes the Middle East and Africa; includes concession
2. locations and franchisee and distributor stores.
1. Includes the U.S. and Canada
LATIN AMERICA(3) ASIA PACIFIC(6)
TOTAL STORES: ~320 TOTAL STORES: ~3,305
Tommy Hilfiger: ~220 (4) Tommy Hilfiger: ~680
Calvin Klein: ~100 (5) Calvin Klein: ~2,625
3. Includes Central and South America and the Caribbean. 6. Includes concession, franchisee and, for Tommy Hilfiger,
4. All locations are licensee stores. 6. licensee stores.
5. Includes franchisee and distributor stores.
Investor Update Winter 2018A Rich History of Sales and Earnings Growth
Revenue & EPS Growth (2003 – 2017)
$9,000 $7.94 $8.00
$7.30 $8,915
$7.03 $7.05 $6.80
$8,000 $6.58 $8,241 $7.00
$8,020
$8,216
$8,203
$7,000 $6.00
$5.44
$6,000 $5.00
$6,043
$4.31 $5,891
$ Millions
$5,000 $4.00
$3.21
$2.99 $4,637
$2.79
$4,000 $2.62 $3.00
$1.88
$3,000 $2.00
$1.37
$0.98
$2,425 $2,397 $2,399
$2,000 $1.00
$2,091
$1,909
$1,548 $1,641
$1,000 $0.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Note: 2003-2007 figures not restated for change in accounting for retirement plans. 2003-2006 and 2008-2017 figures exclude certain amounts that were deemed non-recurring or non-operational. Refer to Appendix for GAAP reconciliations.
Investor Update Winter 2018Drive
Consumer Engagement
Our Expand
Worldwide Reach
Strategic Invest
In Us
Priorities Develop
Talent
Generate
Investor Update Winter 2018
CashTommy Hilfiger
Investor Update
Investor Update Winter
Winter 2018
2018Tommy Hilfiger – Brand Overview
2017 Regional Breakout
GLOBAL RETAIL SALES: $7.4 BN REPORTED REVENUES: $3.9 BN
4%
11% 9%
42% 50%
• One of the world’s leading designer
lifestyle brands
41%
43% • Celebrates the essence of classic
American cool style
• Strong global brand awareness
North America(1) Latin America(2) Asia Pacific(3) Europe(4)
(1) North America includes Canada and Mexico. (2) Latin America includes South America, the Caribbean and Central America. (3) Asia Pacific includes Australia and New Zealand. (4) Europe includes the Middle East and Africa.
Investor Update Winter 2018Tommy Hilfiger – Brand Overview
Distribution
• Select Global Retail • Select Global Retail • Global Retail • Global Retail
• Global tommy.com • Global tommy.com • Global tommy.com • Global tommy.com
• Global Wholesale • Global Wholesale • Global Wholesale • Global Wholesale
Investor Update Winter 2018Tommy Hilfiger – Growth Opportunities
Products Channels Markets
Growth Regions
Europe
Womenswear Accessories Retail
Asia Pacific
Underwear Men’s Tailored Digital Commerce Wholesale
Investor Update Winter 2018Tommy Hilfiger – Global Marketing
& Communications
Objective: Build on consumer-centric go-to-market strategies to maintain global brand relevance & momentum
Investment: Over $180 million in 2017 global marketing spend
Focus: Attracting a new generation of consumers globally; Blend of global and regional brand ambassadors to connect with
consumers worldwide
“See Now, Buy Now”
• Pioneer in “See Now, Buy Now” for both men’s and women’s, extending support across labels, throughout the season and reaching a wider global audience
Women’s Apparel, Footwear & Accessories
• Strong momentum and growth within our overall portfolio
• Performance in women’s has provided a halo across other categories
• Hailey Baldwin, Winnie Harlow and Chinese actress Maggie Jiang named global brand ambassadors for TOMMY HILFIGER women’s
• Actress Zendaya will be the new global TOMMY HILFIGER women’s ambassador beginning in Spring 2019
Menswear
• Launched men’s Ignite strategy with the announcement of TOMMY HILFIGER as the Official Apparel Partner for Mercedes- AMG Petronas Motorsport and
Lewis Hamilton as the global brand ambassador for TOMMY HILFIGER menswear
TOMMY JEANS
• HILFIGER DENIM rebranded as TOMMY JEANS: evolving our label strategy to unlock full business potential and continue momentum with young
millennials and Gen Z consumers
Investor Update Winter 2018Tommy Hilfiger – Business Overview And Financials
Tommy Hilfiger Business Summary
2017 Reported Revenues $3.9 BN
International Revenues ~$2.3 BN
North America Revenues ~$1.6 BN
2017 EBIT Margin(1) 12.9%
(1) EBIT margin excludes certain amounts that were deemed non-recurring or non-operational. Refer to Appendix for GAAP reconciliation of EBIT.
Investor Update Winter 2018Consumer-Centric
Be consumer-centric and enhance global brand relevance
with marketing campaigns and consumer engagement
initiatives designed to drive growth and reflect TOMMY
HILFIGER’s accessible luxury positioning and classic
American cool aesthetic.
Tommy Category Expansion
Category expansion within womenswear and accessories,
men’s tailored clothing and underwear.
Hilfiger Drive
Drive regional expansion, particularly in Asia Pacific.
Strategies Digitize
Digitize Tommy Hilfiger from showrooms to stores and
online experiences.
Evolve
Investor Update Winter 2018 Evolve our supply chain to adapt more quickly to change.Tommy Hilfiger International – Overview
• Healthy brand with premium positioning overseas
• Marketing efforts focused on digital and
social media
• Tommy Hilfiger International business experienced
outstanding performance across Europe and Asia
in 2017
Europe 2017 Europe Revenues Asia
by distribution model(1)
• China: Strong performance in 2017, as the
Europe continues to experience solid multi-year
investments we have made are resonating with
business trends 39% consumers and driving growth
• Localized management differentiates brand from peers
Retail • Japan: Performing well, as our efforts to turn
• Net sales growth in all major EMEA (Europe, Middle East & around the business have seen great progress
Africa) markets in 2017 Wholesale
• Operates the largest digital commerce business within PVH
61%
(1) Retail and wholesale split excludes licensing revenues.
Investor Update Winter 2018Tommy Hilfiger North America – Overview
Continued wholesale sales growth through key partners: 2017 Revenues
by distribution model (1)
U.S. – Exclusive partnership with Macy’s for men’s sportswear;
opportunity to expand categories outside of sportswear through other 26%
wholesale partners
Canada – Retail partnership with Hudson’s Bay Company
Retail
Tommy Hilfiger’s womenswear wholesale business in U.S. and Canada Wholesale
that was licensed to G-III performed well in 2017
74%
Rollout of TOMMY JEANS, with elevated product and designs
Improvements in quality, styling and in-store presentations
Investments in digital commerce and digital marketing driving brand
relevance and consumer engagement
Focus on digital commerce, including improvements to site design,
technology and social media efforts
(1) Retail and Wholesale split excludes licensing revenues.
Investor Update Winter 2018Tommy Hilfiger Licensed Businesses
Over time, we look to assume more direct control over various licensed regions
Asia Pacific Latin America & Mexico
2017 Retail Sales: ~$410MM* 2017 Retail Sales: ~$425MM*
Joint Venture
India Australia New Zealand Brazil Mexico
Distributor
Indonesia Vietnam Philippines
License
Korea Hong Kong Taiwan Latam
Malaysia Singapore
* Licensed businesses only.
Investor Update Winter 2018Calvin Klein
Investor Update
Investor Update Winter
Winter 2018
2018Calvin Klein – Overview
2017 Regional Breakout
GLOBAL RETAIL SALES: $9.1 BN REPORTED REVENUES: $3.5 BN
3% 3%
16%
20%
• One of the best known designer
24%
names in the world.
57% 49% • Bold, progressive ideals.
28%
• Seductive, and often
minimal, aesthetic.
North America(1) Latin America(2) Asia Pacific(3) Europe(1)
(1) North America includes Canada and Mexico. (2) Latin America includes South America, the Caribbean and Central America. (3) Asia Pacific includes Australia and New Zealand. (4) Europe includes the Middle East and Africa.
Investor Update Winter 2018Calvin Klein – Brand Overview
CALVIN KLEIN is a global lifestyle brand that exemplifies bold, progressive ideals and a seductive, and often minimal, aesthetic
Distribution
• Made to measure • Madison Avenue Flagship • Select Global Retail • Select Retail (Asia and Europe)
• Global calvinklein.com • Global calvinklein.com • U.S. calvinklein.com
• Global Wholesale • Select Global Wholesale • Select Global Wholesale
Investor Update Winter 2018Calvin Klein – Brand Overview (cont.)
CALVIN KLEIN is a global lifestyle brand that exemplifies bold, progressive ideals and a seductive, and often minimal, aesthetic
Distribution
• Global Retail • Global Retail • Global Retail • Global Retail
• Global calvinklein.com • Global calvinklein.com • Global calvinklein.com • Global calvinklein.com
• Global Wholesale • Global Wholesale • Global Wholesale • Global Wholesale
Investor Update Winter 2018Calvin Klein – Growth Opportunities
Products Channels Markets
Growth Regions
Europe
Jeanswear Women’s Intimates Stores Digital Commerce
Asia Pacific
Apparel Accessories Travel Retail Shops in Shops
Investor Update Winter 2018Calvin Klein – Global Marketing
& Communications
OBJECTIVE: To create marketing campaigns with one singular, cohesive and aspirational
brand voice showcasing the CALVIN KLEIN lifestyle
INVESTMENT: With over $380 million in global annual marketing spend in 2017, (~40%
funded by licensees), we leveraged CALVIN KLEIN’s brand heritage to grow the top and
bottom line
Focus on consumer engagement and fashion and cultural relevance
Blend of global and regional brand ambassadors:
• Sisters Kim Kardashian West, Khloé Kardashian, Kourtney Kardashian, Kendall Jenner and Kylie Jenner
brand ambassadors for CALVIN KLEIN JEANS and CALVIN KLEIN UNDERWEAR
• Siblings Kaia and Presley Gerber for CALVIN KLEIN JEANS
• Brand ambassadors for Asia include Taiwanese musician Jam Hsiao and Chinese actress Jelly Lin
• CALVIN KLEIN WOMEN, the first CALVIN KLEIN fragrance to be developed under the vision of Raf
Simons, features award-winning actors and voices of their generation, Lupita Nyong'o and Saoirse Ronan
Investor Update Winter 2018Calvin Klein – Business Overview And Financials
Despite the fact that we brought back in house our two
Summary Financials largest apparel categories in 2013, over 50% of the brand’s
global retail sales continues to be from licensing.
2017 Reported Revenues $3.5 BN
Past Today
International Revenues $1.8 BN 54%
89%
North America Revenues $1.7 BN
46%
11%
2017 EBIT Margin 11.9% 2012 2017
Licensee Directly Operated
Investor Update Winter 2018Consumer-Centric
Be consumer-centric and enhance global relevance through
marketing campaigns and consumer engagement initiatives
designed to drive growth and further resonate with
youth-minded consumers.
Calvin Drive
Drive product improvement and expansion, particularly within
apparel, jeans, accessories and women’s intimates.
Develop
Klein Develop compelling digital experiences, while also growing
our presence in specialty stores and opening additional travel
retail locations.
Strategies Gain
Gain greater control of the brand by taking back licensed
businesses to operate them directly.
Sharpen
Investor Update Winter 2018 Sharpen our processes by enhancing our data capabilities.Calvin Klein North America – Overview
Healthy positioning across wholesale and 2017 Revenues
retail channels by distribution model
Provocative 360°marketing campaigns are a driving 43%
Retail
force behind the brand, leveraging traditional and Wholesale
57%
digital platforms
Continue to diversify the business in response to
consumer shopping preferences:
• Growing digital penetration with our wholesale partners
• Embracing partnerships with pure play digital commerce players
• Continuing to sell into select specialty apparel retailers
Digital commerce grew approximately 20% in 2017,
driven by recent investments in website navigation
and technology
Note: Retail and wholesale split excludes licensing revenues.
Investor Update Winter 2018Calvin Klein International – Overview
Asia Pacific Europe Latin America (Primarily Brazil)
• Distribution ~75% retail (including concession • Distribution ~50% retail / ~50% wholesale • Distribution ~35% retail / ~65% wholesale
shops and free-standing stores) / 25% wholesale in 2017
• Brand positioned well, with strong
• Strong brand positioning across key regions • Largest categories: Jeans and underwear; consumer relevance and acceptance
Biggest opportunities: Men’s sportswear, across product lines
• Largest categories: Jeans and underwear; accessories, women’s sportswear
Biggest opportunities: Performance (Fall 2018 launch) • Largest category: Jeans; Biggest
and sportswear opportunities: Underwear, sportswear
• Largest regional opportunity for CALVIN and performance
KLEIN, as we capitalize on the strong
consumer appetite for the brand
2017 Revenue by Region
~20%
~50%
~30%
China Central & South Asia Pacific Korea
Investor Update Winter 2018Calvin Klein Licensing
7 significant partnerships represented over 80% of licensing and advertising revenue in 2017. Over time, we look to assume more
direct control over various licensed businesses where we have core competencies.
Global Retail Sales
Women’s Apparel / Other Fragrance Footwear
G-III $1.8BN COTY $1.2BN JIMLAR ~$315MM
Men’s Tailored Watches & Jewelry Eyewear CK Calvin Klein / Asia
PEERLESS ~$240MM SWATCH ~$225MM MARCHON ~$145MM CLUB ~$115MM
Investor Update Winter 2018Heritage Brands
Investor Update
Investor Update Winter
Winter 2018
2018Heritage Brands – Overview & Financials
Summary Financials
2017 Reported Revenues - $1.6 BN
2017 EBIT Margin - 6.7%
Heritage Brands
• Underwear
• Sportswear
• Dress Furnishings
• Swimwear
Licensed Brands
include:
• Chaps
• DKNY
• Kenneth Cole Reaction
• MICHAEL Michael Kors
• Michael Kors Collection
Investor Update Winter 2018Consumer-Centric
Be consumer-centric by designing and marketing quality, trend-
tight products that offer great value to our consumers and
introducing products with new technologies and new features.
Heritage Leverage
Leverage and enhance each brand’s position in the market.
Maximize
Brands Maximize distribution, with the greatest opportunities in mass
market retailers and digital commerce (through our wholesale
partners, as well as our own digital commerce site, which
launched Summer 2018)
Enhance
Strategies Enhance profitability by capitalizing on supply chain opportunities
and leveraging consumer insights, while also reducing costs and
maintaining a critical focus on inventory management.
Investor Update Winter 2018Financial Overview
Investor Update
Investor Update Winter
Winter 2018
2018PVH Financial History
($ in Millions, except per share data)
Warnaco Acquisition FX Headwinds
2013 2014 2015 2016 2017
Revenues $8,216* $8,241 $8,020 $8,203 $8,915
Gross Margin 52.4%* 52.6%* 51.6%* 53.4%* 54.9%
EBIT* $967 $921 $842 $794 $864
EBIT Margin* 11.8% 11.2% 10.5% 9.7% 9.7%
EPS* $7.03 $7.30 $7.05 $6.80 $7.94
EPS Growth* 7% 4% -3% -4% +17%
* Figures exclude certain amounts that were deemed non-recurring or non-operational. Refer to Appendix for GAAP reconciliations.
Investor Update Winter 2018PVH Consolidated Summary of 3Q18 YTD Performance
3Q18 YTD YoY Change
+12% reported
Revenues $7.2BN reported
+10% constant currency*
Gross Margin 55.1% Up 20bps
Non-GAAP EBIT* $778MM +13%
Non-GAAP EBIT Margin* 10.8% Up 10bps
Non-GAAP EPS* $7.75 +22%
(including $0.14 positive impact from foreign currency)
* Figures exclude certain amounts that were deemed non-recurring or non-operational. Refer to Appendix for GAAP reconciliations.
Investor Update Winter 2018PVH Financial History
Free Cash Flow ($ in Millions) Gross Leverage Ratio*
$700 $644 140%
$578 3.4
$600 120%
$481 117% 3.2 3.1x 3.1x
$500 100% 3.0x
$400 99%
$339 80% 3.0
$300 79% $274 60% 2.8 2.7x
$200 40% 2.6 2.5x
44% 47%
$100 20% 2.4
$0 0% 2.2
2014 2015 2016 2017 LTM 3Q18
2.0
Free Cash Flow Free Cash Flow / Non-GAAP Net Income* 2014 2015 2016 2017 LTM 3Q18
Debt Paydown of ~$2.0 Billion in Senior Secured Loans Since the Warnaco Acquisition
NOTE: Free cash flow defined as cash flow from operations less capital expenditures and dividends. Updated guidance related to the classification of certain cash receipts and cash payments in the statement of cash flows was adopted in the first
quarter of 2018. As a result, contingent payments to Mr. Klein are now included in cash flow from operations.
2017 and LTM 2Q18 free cash flows were principally impacted by larger capital expenditures compared to prior years, an increase in inventories, principally driven by our expected sales growth and the timing of inventory receipts as compared to the
prior year period due to the inclusion of a 53rd week of operations in 2017.
* Figures exclude certain amounts that were deemed non-recurring or non-operational. Refer to Appendix for GAAP reconciliations.
Investor Update Winter 2018Appendix
Investor Update
Investor Update Winter
Winter 2018
2018GAAP to Non-GAAP Net Income Per Common Share Reconciliations
(2003-2006)
GAAP to Non-GAAP Reconciliations
Net Income (Loss) Per Common Share
(Dollars and Shares in Millions, Except Per Share Data)
2006 2005 2004 2003
GAAP Adjustments(1) Non-GAAP GAAP Adjustments(2) Non-GAAP GAAP Adjustments(3) Non-GAAP GAAP Adjustments(4) Non-GAAP
Net Income (Loss) per Common Share Calculation
Net Income $ 155.2 $ 6.4 $ 148.8 $ 103.9 $ 103.9 $ 58.6 $ (12.1) $ 70.7 $ 14.7 $ (35.8) $ 50.5
Preferred Stock Dividends on Converted Stock 3.2 3.2 2.1 $ 2.1 20.0 20.0
Inducement Payment and Offering Costs 10.9 10.9 14.2 14.2
Net Income (Loss) Available to Common Stockholders $ 141.1 $ (7.7) $ 148.8 $ 87.6 $ 16.3 $ 103.9 $ 58.6 $ (12.1) $ 70.7 $ (5.3) $ (35.8) $ 30.5
Total Shares for Diluted Net Income (Loss) per Common Share 53.5 (3.2) 56.7 51.7 (3.3) 55.0 51.6 51.6 30.3 (0.7) 31.0
Diluted Net Income (Loss) per Common Share $ 2.64 $ 2.62 $ 1.70 $ 1.88 $ 1.14 $ 1.37 $ (0.18) $ 0.98
1) Adjustments for 2006 represent the elimination of (i) a gain associated with the sale by our subsidiary on January 31, 2006 of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia; (ii) costs resulting from the departure in February 2006 of our former
chief executive officer; (iii) costs associated with closing our apparel manufacturing facility in Ozark, Alabama in May 2006; (iv) the tax effects associated with the foregoing pre-tax items; and (v) an inducement payment and offering costs incurred in connection with the voluntary conversion by the holders of our Series B
convertible preferred stock of a portion of such stock into shares of common stock and the subsequent sale of a portion of such common shares by the holders. The inducement payment and offering costs resulted in a reduction of net income available to common stockholders for purposes of calculating diluted net income per
common share.
2) Adjustments for 2005 represent the elimination of (i) an inducement payment and offering costs incurred in connection with the voluntary conversion by the holders of our Series B convertible preferred stock of a portion of such stock into shares of common stock and the subsequent sale of such common shares by the holders.
The inducement payment and offering costs resulted in a reduction of net income available to common stockholders for purposes of calculating diluted net income per common share.
3) Adjustments for 2004 represent the elimination of (i) charges related to debt extinguishment costs; (ii) charges associated with the closing of certain outlet retail stores and exiting the wholesale footwear business and other related costs; (iii) the tax effects associated with the foregoing pre-tax costs; and (iv) a tax benefit
associated with the realization of certain state net operating loss carryforwards.
4) Adjustments for 2003 represent the elimination of (i) charges related to integration costs associated with our acquisition of Calvin Klein; (ii) charges associated with the impairment and closing of certain outlet retail stores and exiting the wholesale footwear business and other related costs; (iii) a gain resulting from our sale of
the minority interest in Gant Company AB; and (iv) the tax effects associated with the foregoing pre-tax items. Calvin Klein integration costs consist of (a) the operating losses of certain Calvin Klein businesses, which we have closed or licensed, and associated costs in connection therewith and (b) the costs of certain
duplicative personnel and facilities incurred during the integration of various logistical and back office functions.
Investor Update Winter 2018GAAP to Non-GAAP Net Income Per Common Share Reconciliations
(2008-2010)
GAAP to Non-GAAP Reconciliations
Net Income Per Common Share
(Dollars and Shares in Millions, Except Per Share Data)
2010 2009 2008
(1) (2)
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP GAAP Adjustments(3) Non-GAAP
Net Income per Common Share Calculation
Net Income (Loss) $ 54.4 $ (236.0) $ 290.4 $ 153.5 $ 7.2 $ 146.3 $ 39.1 $ (116.9) $ 156.0
Total Shares for Diluted Net Income per Common Share 67.4 67.4 52.5 52.5 52.2 52.2
Diluted Net Income per Common Share $ 0.81 $ 4.31 $ 2.92 $ 2.79 $ 0.75 $ 2.99
1) Adjustments for 2010 represent the elimination of (i) the costs incurred in connection with our acquisition and integration of Tommy Hilfiger, including transaction, restructuri ng and debt extinguishment costs, short-lived non-cash valuation amortization charges and the effects of hedges against Euro to U.S. dollar exchange
rates relating to the purchase price; (ii) the costs incurred in connection with our exit from the United Kingdom and Ireland Van Heusen dresswear and accessories business; (iii) the recognized actuarial loss on retirement plans; (iv) the tax effects associated with the foregoing pre-tax costs; and (v) a tax benefit related to the
lapse of the statute of limitations with respect to certain previously unrecognized tax positions.
2) Adjustments for 2009 represent the elimination of (i) the costs incurred in connection with our restructuring initiatives announced in the fourth quarter of 2008, including the shutdown of domestic production of machine-made neckwear, a realignment of our global sourcing organization, reductions in warehousing capacity and
other initiatives to reduce corporate and administrative expenses; (ii) the recognized actuarial loss on retirement plans; (i ii) the tax effects associated with the foregoing pre-tax costs; and (iv) a net tax benefit related principally to the lapse of the statute of limitations with respect to certain previously unrecognized tax positions.
3) Adjustments for 2008 represent the elimination of (i) the costs incurred in connection with our restructuring initiatives announced in the fourth quarter of 2008, including the shutdown of domestic production of machine-made neckwear, a realignment of our global sourcing organization, reductions in warehousing capacity and
other initiatives to reduce corporate and administrative expenses; (ii) fixed asset impairment charges for approximately 200 of our retail stores; (iii) the recognized actuarial loss on retirement plans; (iv) the operations of our Geoffrey Beene outlet retail division and the costs associated with the closing of such division; and (v)
the tax effects associated with the foregoing pre-tax costs.
Investor Update Winter 2018GAAP to Non-GAAP Net Income Per Common Share Reconciliations
(2011-2013)
GAAP to Non-GAAP Reconciliations
Net Income Per Common Share
(Dollars and Shares in Millions, Except Per Share Data)
2013 2012 2011
(1) (2)
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP GAAP Adjustments(3) Non-GAAP
Total Earnings Before Interest and Taxes $ 513.4 $ (453.5) $ 966.9 $ 660.4 $ (91.2) $ 751.6 $ 491.2 $ (190.7) $ 681.9
Net Income per Common Share Calculation
Net Income Attributable to PVH Corp. $ 143.5 $ (437.5) $ 581.0 $ 433.8 $ (52.6) $ 486.4 $ 275.7 $ (121.2) $ 396.9
Total Shares for Diluted Net Income per Common Share 82.6 82.6 73.9 73.9 72.9 72.9
Diluted Net Income per Common Share $ 1.74 $ 7.03 $ 5.87 $ 6.58 $ 3.78 $ 5.44
1) Adjustments for 2013 represent the elimination of (i) the costs incurred in connection with our acquisition and integration of The Warnaco Group, Inc. (“Warnaco”) and the related restructuring; (ii) the loss incurred in connection with the sale of substantially all of the assets of the G. H. Bass & Co. (“Bass”) business, including
related costs; (iii) the income due to the amendment of an unfavorable contract, which resulted in the reduction of a liabili ty recorded at the time of the Tommy Hilfiger acquisition; (iv) the costs incurred in connection with our debt modification and extinguishment; (v) the interest expense incurred prior to the Warnaco acquisition
closing date related to the $700 of senior notes issued in 2012; (vi) the recognized actuarial gains on retirement plans; (vi i) the tax effects associated with the foregoing pre-tax items; (viii) non-recurring discrete tax items related to the Warnaco integration; and (ix) a non-recurring discrete tax item attributable to an increase in
our previously-established liability for an uncertain tax position related to European and U.S. transfer pricing arrangements.
2) Adjustments for 2012 represent the elimination of (i) the costs incurred in connection with our integration of Tommy Hilfiger and the related restructuring; (ii) the costs incurred in connection with our acquisition of Warnaco; (iii) the interest expense incurred prior to the Warnaco acquisition closing date related to the $700 of
senior notes issued in 2012; (iv) the recognized actuarial losses on retirement plans; (v) the tax effects associated with the foregoing pre-tax costs; and (vi) the tax benefit resulting from the recognition of previously unrecognized net operating loss assets and tax credits.
3) Adjustments for 2011 represent the elimination of (i) the costs incurred in connection with our integration of Tommy Hilfiger and the related restructuring; (ii) the expense incurred associated with settling the unfavorable preexisting license agreement in connection with our buyout of the TOMMY HILFIGER perpetual license in
India; (iii) the costs incurred in connection with our modification of our credit facility; (iv) the costs incurred in connection with our negotiated early termination of our license to market sportswear under the Timberland brand and the 2012 exit from the Izod women’s wholesale sportswear business; (v) the recognized actuarial
losses on retirement plans; (vi) the tax effects associated with the foregoing pre-tax costs; and (vii) the tax benefit resulting from revaluing certain deferred tax liabilities due to a decrease in the statutory tax rate in Japan.
Investor Update Winter 2018GAAP to Non-GAAP Reconciliations (2014-2016)
GAAP to Non-GAAP Reconciliations
(Dollars and Shares in Millions, Except Per Share Data)
2016 2015 2014
GAAP Adjustments(1) Non-GAAP GAAP Adjustments(2) Non-GAAP GAAP Adjustments(3) Non-GAAP
Total Revenue $ 8,203.1 $ - $ 8,203.1 $ 8,020.3 $ - $ 8,020.3 $ 8,241.2 $ - $ 8,241.2
Total Gross Profit 4,370.3 (7.3) 4,377.6 4,161.6 19.5 4,142.1 4,326.7 (6.5) 4,333.2
Total EBIT 789.2 (4.9) 794.1 760.5 (81.0) 841.5 529.9 (390.7) 920.6
Net Income per Common Share Attributable to PVH Calculation
Net Income $ 549.0 $ (1.1) $ 550.1 $ 572.4 $ (13.3) $ 585.7 $ 439.0 $ (168.8) $ 607.8
Total Shares for Diluted Net Income per Common Share 80.9 80.9 83.1 83.1 83.3 83.3
Diluted Net Income per Common Share $ 6.79 $ 6.80 $ 6.89 $ 7.05 $ 5.27 $ 7.30
(1)
Adjustments for 2016 from the elimination of (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with the discontinuation of several
licensed product lines in the Heritage Brands dress furnishings business; (iii) the costs incurred in connection with the licensing to G-III Apparel Group, Ltd. of the Tommy Hilfiger womenswear wholesale business in the
U.S. and Canada (the “G-III license”), which resulted in the discontinuation of our directly operated Tommy Hilfiger North America womenswear wholesale business in 2016; (iv) the costs incurred in connection with the
restructuring associated with the global creative strategy for CALVIN KLEIN ; (v) the noncash gain recorded to write-up our equity investment in TH Asia, Ltd. (“TH China”), our former joint venture for TOMMY HILFIGER
in China, to fair value in connection with the acquisition of the 55% interest that we did not already own (the “TH China acquisition”); (vi) the one-time costs recorded on our equity investment in TH China prior to the
TH China acquisition closing; (vii) the costs incurred in connection with the TH China acquisition, primarily consisting of noncash valuation adjustments and amortization of short-lived assets; (viii) the costs incurred in
connection with the amendment of our credit facility; (ix) the noncash costs recorded in connection with the deconsolidation of our subsidiary that principally operated and managed our Calvin Klein business in Mexico
("the Mexico deconsolidation") in connection with the formation of a joint venture in Mexico to operate that and other businesses; (x) the gain recorded in connection with a payment made to us to exit a TOMMY
HILFIGER flagship store in Europe; (xi) the costs incurred in connection with the early termination of the previous license agreement for the Tommy Hilfiger men’s tailored clothing business in North America (the “TH
men’s tailored license termination”); (xii) the recognized actuarial gain on retirement plans; (xiii) the tax effects associated with the foregoing pre-tax items; and (xiv) the tax benefits associated with discrete items
related to the resolution of uncertain tax positions.
(2)
Adjustments for 2015 from the elimination of (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with the operation of and exit from
the Izod retail business; (iii) the costs incurred principally in connection with the discontinuation of several licensed product lines in the Heritage Brands dress furnishings business; (iv) the costs incurred in connection
with the G-III license; (v) the gain recorded on our equity investment in the parent company of the Karl Lagerfeld brand ("Karl Lagerfeld"); (vi) the recognized actuarial gain on retirement plans; (vii) the tax effects
associated with the foregoing pre-tax items; and (viii) the tax benefits associated with discrete items related to the resolution of uncertain tax positions and the impact of tax law and tax rate changes on deferred
taxes.
(3)
Adjustments for 2014 from the elimination of (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with our exit from the Izod retail
business, including noncash impairment charges; (iii) the costs incurred in connection with our exit from a discontinued product line in the Tommy Hilfiger Japan business; (iv) the impairment of certain TOMMY
HILFIGER stores in North America; (v) the costs incurred related to the sale of the Bass business; (vi) the costs incurred in connection with the amendment and restatement of our credit facility and the related
redemption of our 7 3/8% senior notes due 2020; (vii) the net gain on the deconsolidation of certain Calvin Klein subsidiaries in Australia and New Zealand and the previously consolidated Calvin Klein joint venture in
India; (viii) the recognized actuarial loss on retirement plans; (ix) the tax effects associated with the foregoing pre-tax items; and (x) the tax benefits associated with discrete items primarily related to the resolution of
uncertain tax positions and various Warnaco integration activities.
Investor Update Winter 2018GAAP to Non-GAAP Revenue & Gross Margin Reconciliations
(Dollars in Millions)
2013(1) 2008(2) 2003(3)
GAAP Revenue $ 8,186.4 $ 2,492.0 $ 1,569.0
Adjustments 30.0 (95.0) (21.0)
Non-GAAP Revenue 8,216.4 2,397.0 1,548.0
GAAP Gross Profit 4,219.3
Adjustments 85.6
Non-GAAP Gross Profit 4,304.9
Non-GAAP Gross Margin 52.4%
(1) Adjustments for 2013 represent the revenue reduction due to sales returns for certain Warnaco wholesale customers in connection with initiative to reduce excess inventory levels and the costs incurred in connection with the
acquisition and integration of Warnaco and the related restructuring.
(2) Adjustments for 2008 represent the elimination of the operations of the Geoffrey Beene outlet retail division, which was closed.
(3) Adjustments for 2003 represent the elimination of the operations of certain Calvin Klein businesses, which were closed or licensed.
Investor Update Winter 2018GAAP to Non-GAAP Reconciliations – 2017, Q3 2017 & Q3 2018
GAAP to Non-GAAP Reconciliations
(Dollars and Shares in Millions, Except Per Share Data)
2017 Q3 YTD 2017 Q3 YTD 2018
Positive Impact
of Foreign Constant
(1) (2) (3)
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP Currency Currency
Revenue
Calvin Klein $ 3,461.6 $ - $ 3,461.6
Tommy Hilfiger 3,893.2 - 3,893.2
Heritage Brands 1,560.0 - 1,560.0
Total Revenue 8,914.8 - 8,914.8 $ 6,415.9 $ - $ 6,415.9 $ 7,172.8 $ - $ 7,172.8 $ 118.6 $ 7,054.2
EBIT
Calvin Klein 410.5 - 410.5
Tommy Hilfiger 318.5 (183.2) 501.7
Heritage Brands 104.3 - 104.3
Corporate (200.9) (48.0) (152.9)
Total EBIT 632.4 (231.2) 863.6 574.4 (112.5) 686.9 758.0 (19.9) 777.9
Net Income per Common Share Attributable
to PVH Calculation
Net Income $ 537.8 $ (86.6) $ 624.4 $ 429.3 $ (71.4) $ 500.7 $ 587.7 $ (15.0) $ 602.7
Total Shares for Diluted Net Income per
Common Share 78.6 78.6 78.7 78.7 77.7 77.7
Diluted Net Income per Common Share $ 6.84 $ 7.94 $ 5.45 $ 6.36 $ 7.56 $ 7.75
(1)
Adjustments for 2017 represent the elimination of (i) the costs incurred related to the TH China acquisition, primarily consisting of noncash amortization of short-lived assets; (ii) the costs incurred in connection with
agreements to restructure our supply chain relationship with Li & Fung Trading Limited (“Li & Fung”), under which we terminated our non-exclusive buying agency agreement with Li & Fung in 2017 (the “Li & Fung
termination”); (iii) the costs incurred in connection with the noncash settlement of certain of our benefit obligations related to our retirement plans as a result of an annuity purchased for certain participants, under
which such obligations were transferred to an insurer; (iv) the costs incurred in connection with the relocation of the Tommy Hilfiger office in New York, including noncash depreciation expense; (v) the net costs
incurred in connection with the consolidation within our warehouse and distribution network in North America, which included a gain recorded on the sale of a warehouse and distribution center; (vi) the costs incurred
in connection with an amendment to Mr. Tommy Hilfiger’s employment agreement pursuant to which we made a cash buyout of a portion of the future payment obligation (the “Mr. Hilfiger amendment”); (vii) the
costs incurred in connection with the early redemption of our $700 million 4 1/2% senior notes; (viii) the costs incurred in connection with the issuance of our €600 million 3 1/8% senior notes; (ix) the recognized
actuarial loss on retirement plans; (x) the tax effects associated with the foregoing pre-tax items; (xi) the discrete tax benefits related to the resolution of uncertain tax positions; (xii) the discrete net tax benefit
recorded in connection with the enactment of the U.S. Tax Cuts and Jobs Act of 2017 in the fourth quarter of 2017; and (xiii) the discrete tax benefit related to an excess tax benefit from the exercise of stock options by
our Chief Executive Officer.
(2)
Adjustments for the thirty-nine weeks ended October 29, 2017 represent the elimination of (i) the costs incurred related to the TH China acquisition, primarily consisting of noncash amortization of short-lived
assets; (ii) the costs incurred in connection with the Li & Fung termination; (iii) the costs incurred in connection with the noncash settlement of certain of our benefit obligations related to our retirement plans as a
result of an annuity purchased for certain participants, under which such obligations were transferred to an insurer; (iv) the costs incurred in connection with the relocation of the Tommy Hilfiger office in New York,
including noncash depreciation expense; (v) the costs incurred in connection with the consolidation within our warehouse and distribution network in North America; (vi) the tax effects associated with the
foregoing pre-tax items; and (vii) the discrete tax benefits related to the resolution of uncertain tax positions.
(3)
Adjustments for the thirty-nine weeks ended November 4, 2018 represent the elimination of the costs incurred related to the TH China acquisition, consisting of noncash amortization of short-lived assets, and
the resulting tax effect.
Investor Update Winter 2018GAAP to Non-GAAP Gross Debt/Earnings Before Interest, Taxes,
Depreciation & Amortization (EBITDA) Reconciliations
GAAP to Non-GAAP Reconciliations
Debt/EBITDA
(Dollars in Millions, Except Ratios)
Q3 YTD Q3 YTD LTM Q3 (3)
Amounts that were deemed non-recurring or non-operational for 2016 were (i) the costs incurred in connection with our integration of Warnaco and the related
2014(1) 2015(2) 2016(3) 2017(4) 2017(5) 2018(6) 2018
GAAP Net Income Attributable to PVH Corp. $ 439 $ 572 $ 549 $ 538 $ 429 $ 588 $ 697
restructuring; (ii) the costs incurred in connection with the discontinuation of several licensed product lines in the Heritage Brands dress furnishings business; (iii) the costs
Pre-Tax Items Deemed Non-recurring or Non-operational 391 81 5 231 113 20 138 incurred in connection with the G-III license; (iv) the costs incurred in connection with the restructuring associated with the global creative strategy for CALVIN KLEIN ; (v)
GAAP Interest and Taxes 91 188 241 96 146 172 122 the noncash gain recorded to write-up our equity investment in TH China to fair value in connection with the TH China acquisition; (vi) the one-time costs recorded on our
GAAP Depreciation and Amortization 245 257 322 325 239 248 334 equity investment in TH China prior to the TH China acquisition closing; (vii) the costs incurred in connection with the TH China acquisition, primarily consisting of noncash
Depreciation and Amortization Items Deemed Non-recurring or Non-operational (6) (6) (50) (38) (31) (20) (27) valuation adjustments and amortization of short-lived assets; (viii) the costs incurred in connection with the amendment of our credit facility; (ix) the noncash costs
Non-GAAP EBITDA as presented $ 1,160 $ 1,092 $ 1,067 $ 1,152 $ 896 $ 1,008 $ 1,264 recorded in connection with the Mexico deconsolidation; (x) the gain recorded in connection with a payment made to us to exit a TOMMY HILFIGER flagship store in Europe;
(xi) the costs incurred in connection with the TH men's tailored license termination; and (xii) the recognized actuarial gain on retirement plans.
Gross Debt, Including Current Portion and Short-term Borrowings $ 3,557 $ 3,225 $ 3,242 $ 3,106 $ 3,176
Capital Lease Obligations 18 15 16 16 14 (4)
Amounts that were deemed non-recurring or non-operational for 2017 were (i) the costs incurred related to the TH China acquisition, primarily consisting of noncash
Total Debt $ 3,575 $ 3,240 $ 3,258 $ 3,122 $ 3,190 amortization of short-lived assets; (ii) the costs incurred in connection with the Li & Fung termination; (iii) the costs incurred in connection with the noncash settlement of
Gross Leverage Ratio 3.1 3.0 3.1 2.7 2.5
certain of our benefit obligations related to our retirement plans as a result of an annuity purchased for certain participants, under which such obligations were transferred
(1)
to an insurer; (iv) the costs incurred in connection with the relocation of the Tommy Hilfiger office in New York, including noncash depreciation expense; (v) the net costs
Amounts that were deemed non-recurring or non-operational for 2014 were (i) the costs incurred in connection with our integration of Warnaco and the related
incurred in connection with the consolidation within our warehouse and distribution network in North America, which included a gain recorded on the sale of a warehouse
restructuring; (ii) the costs incurred in connection with our exit from the Izod retail business, including noncash impairment charges; (iii) the costs incurred in connection
and distribution center; (vi) the costs incurred in connection with the Mr. Hilfiger amendment; (vii) the costs incurred in connection with the early redemption of our $700
with our exit from a discontinued product line in the Tommy Hilfiger Japan business; (iv) the impairment of certain TOMMY HILFIGER stores in North America; (v) the costs
incurred related to the sale of the Bass business; (vi) the costs incurred in connection with the amendment and restatement of our credit facility and the related redemption
million 4 1/2% senior notes; (viii) the costs incurred in connection with the issuance of our €600 million 3 1/8% senior notes; and (ix) the recognized actuarial loss on
of our 7 3/8% senior notes due 2020; (vii) the net gain on the deconsolidation of certain Calvin Klein subsidiaries in Australia and New Zealand and the previously retirement plans.
consolidated Calvin Klein joint venture in India; and (viii) the recognized actuarial loss on retirement plans. (5)
Amounts that were deemed non-recurring or non-operational for the thirty-nine weeks ended October 29, 2017 were (i) the costs incurred related to the TH China
acquisition, primarily consisting of noncash amortization of short-lived assets; (ii) the costs incurred in connection with the Li & Fung termination; (iii) the costs incurred in
(2)
Amounts that were deemed non-recurring or non-operational for 2015 were (i) the costs incurred in connection with our integration of Warnaco and the related connection with the noncash settlement of certain of our benefit obligations related to our retirement plans as a result of an annuity purchased for certain participants,
restructuring; (ii) the costs incurred in connection with the operation of and exit from the Izod retail business; (iii) the costs incurred principally in connection with the under which such obligations were transferred to an insurer; (iv) the costs incurred in connection with the relocation of the Tommy Hilfiger office in New York, including
discontinuation of several licensed product lines in the Heritage Brands dress furnishings business; (iv) the costs incurred in connection with the G-III license; (v) the gain noncash depreciation expense; and (v) the costs incurred in connection with the consolidation within our warehouse and distribution network in North America.
recorded on our equity investment in Karl Lagerfeld; and (vi) the recognized actuarial gain on retirement plans.
(6)
Amounts that were deemed non-recurring or non-operational for the thirty-nine weeks ended November 4, 2018 were the costs incurred related to the TH China
acquisition, consisting of noncash amortization of short-lived assets.
Investor Update Winter 2018GAAP to Non-GAAP Cash Flow Reconciliations
GAAP to Non-GAAP Reconciliations
Cash Flow
(Dollars in Millions)
Q3 YTD Q3 YTD LTM Q3
2014 2015 2016 2017 2017 2018 2018
Cash Flow from Operations(1) $ 749 $ 854 $ 903 $ 644 $ 205 $ 305 $ 744
Less:
Capital Expenditures 256 264 247 358 235 270 393
Dividends 12 12 12 12 12 12 12
Free Cash Flow $ 481 $ 578 $ 644 $ 274 $ (42) $ 23 $ 339
(1)
Updated guidance related to the classification of certain cash receipts and cash payments in the statement of cash
flows was adopted in the first quarter of 2018. As a result, contingent payments to Mr. Klein are now included in cash
flow from operations. Prior amounts have been adjusted to reflect the retrospective application of this guidance.
Investor Update Winter 2018Investor Update Winter 2018
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